Government steps on right track

After unveiling the economic reform measures, the Supreme Court’s opinion on presidential reference that auction is not the only way for allocation of natural resources has given much breather to the government. This relief bears a great significance for the government as it has faced a lot of embarrassment in its second tenure on account of corruption charges especially in allocation of natural resources. On the one hand, the corruption charges diminished the government’s credibility at its lowest ebb, on the other hand the political pressure tied its hands whenever it tried to carry forward the economic reforms. Government’s predicament on economic front had virtually stopped the wheels of the economy and finally the country began to move to the path of uncertainty.

At present, it cannot be said that there were no irregularities in the allocation of 2G spectrum or coal blocks to the private firms. But the recent opinion of the Supreme Court has emboldened the policy makers who can now say that their policy on allotment of natural resources was right and the assessment of Comptroller and Auditor General which has estimated heavy loss to the nation in this regard was incorrect. The Supreme Court’s decision on allocation of natural resources is a sort of moral victory, but it cannot be denied that the government’s ‘first come first serve’ policy doesn’t only lack transparency but also provide ample space for irregularities and embezzlement.

Senior union ministers like Kapil Sibal, Salman Khurshid and P Chidambaram are free to claim by citing the decision of the Apex Court that the government’s stand in the allocation of natural resources was flawless as well as the CAG should refrain from raising questions on government’s policy matters while estimating profit and losses to the exchequer, but they cannot say firmly that there was no scam in allocation of 2G spectrum or coal blocks. It is a fact that irregularities took place in allocation of coal blocks and 2G spectrum, which is clear from the cancelation of all licenses and actions against the companies that were allocated coal blocks illegally. The moot point is will the truth in the two cases ever come to the public domain?

The ruling dispensation at the Centre can now relax as it has got rid of Trinamool’s pressure tactics. Mamata Banerjee’s Trinamool Congress withdrew its support from the UPA government following the latter’s decision to allow hike in diesel price, capping the number of LPG cylinders and FDI in retail market, but the government tackled the crisis successfully with the support of Samajwadi Party and Bahujan Samaj Party. The situation emerged in the aftermath of Trinamool’s exit actually gave a new lease of life to the UPA government. As far as the BJP is concerned, it targeted the government in its national executive meet over FDI decision and issue of corruption. But the main opposition party is also not in a position to pose any threat to the government’s stability. Even, it cannot be sure if its own allies would stand by its move to topple the UPA government. Clearly, the problems which had recently cropped up in front of the government seem to be sorted, which is clearly reflected in the stock market.

It is noteworthy that the government till recently showing lackadaisical attitude in carrying forward the economic reforms is apparently moving forward on this course. Ever since P Chidambaram’s entry in the Ministry of Finance after the exit of Pranab Mukherjee, it seems that the government is enthused to push forward such policies which will help it bring the national economy back to track. However, the government will succeed in revitalizing the economy only by putting a check on widening fiscal deficit, for which lots of exercises needed. It can be possible some of its recent decisions would trouble common people due to its inflationary impacts, but people should always remember that it would be best thing for them when they will not require living on government-sponsored subsidy. The interests of common people will be served only when they have greater employment opportunities. Employment opportunities will be generated only when the process of industrialization is intensified and this will happen only when the interest rate is reduced. For low interest rate, it is essential to control the widening fiscal deficit. Subsidy is billed to be a major cause of fiscal deficit and the most disappointing thing is that that eligible people are deprived of the benefit of subsidy due to rampant corruption in the system.

The issue of proper channelizing of subsidy is being debated for the past many years, but no progress has been witnessed so far. Now the Centre is hinting at transferring subsidy amount directly to the bank accounts of the eligible persons, however, the success of this programme is yet to be seen. No doubt, the success of this plan will immensely benefit both the nation and the needy people. It is possible to benefit unprivileged people by spending much less than the heavy expenditure of nearly 1.5 lakh crore being earmarked for the subsidy at present. The faulty system has benefitted the middlemen who gulp a lion share of the fund meant for the welfare of the deprived people.

The government’s proactiveness for carrying forward the economic reforms should be kept alive especially to work on the suggestions made by different committees to improve the economy. Government’s cold response to Kelkar committee’s suggestions on slashing subsidy and improving the system of taxation is highly disappointing. The Centre can heave a sigh of relief as it is now free from TMC’s protest against taking decisions on economic front. The position of the opposition parties including BJP is also not so good. Given this favourable situation, the government has an ideal timing to push up its agenda on economic reforms. It will be interesting to see if the government succeeds in taking advantage of this opportunity.

(An original copy of the article published in Hindi on September 30, 2012 translated by the English Editorial. The author is Group Editor of Dainik Jagran)